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Trade Distribution Options

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While a bookstore seems like the most logical place to sell a book, small, startup publishers find that getting books into bookstores, getting them sold to actual readers, and then getting paid are daunting and often discouraging tasks.

The good news is that consumers all over the country have ready access to more books than they ever knew existed. People in most small cities can walk into a chain superstore featuring 100,000 titles or more, while anyone with a computer and modem can access an online bookseller and tap into a database that includes millions of titles. You can now rest assured that the reader who is looking for your book will be able to find it. The bad news is that, with so many competing titles, readers need to be highly motivated to select your book from the many choices that present themselves.

Also on the downside, since power has shifted from publishers to chains, wholesalers, and online retailers, publishers now have little bargaining power with the few accounts that control a large percentage of sales. As a consequence, they have gradually ceded discount points, accommodated more returns, and found it increasingly difficult to enforce the rule that a returned book must be in resalable condition to receive credit.

Thus, publishers that depend on bookstores for the major portion of their sales need a higher sales volume to make a book profitable. At the same time, they need to make tighter budgets fuel stronger marketing because of the more competitive marketplace. This squeeze is especially hard on small publishers that have little margin for error and lack the economy of scale found in big houses. So, what do you do?

Often, the key to profitability lies in developing multiple sources of income, including so-called special sales in various nontraditional channels that run parallel to trade sales channels. What follows is a description of the trade distribution options for those who are just starting out, along with guidelines for making the right choice if trade distribution is one of your goals. The strategy that’s right for you will depend partly on whether the trade represents your primary source of sales or just one piece of a more complex marketing picture. There is no one strategy that’s right for everyone.

Full-Service Distributors

For many small and even midsize publishers, the easiest and probably most cost-effective option is working with a full-service distributor. Demanding exclusive distribution rights to trade bookstores and the wholesalers that supply them, full-service distributors field sales reps (either salaried or commissioned), maintain warehouses, ship books, collect payments, and then pay publishers after subtracting fees that range from 20 to 30 percent of the net receivables on books sold. Payment is typically 90 days from the sale of books, and distributors usually hold back a percentage for returns.

While these fees may seem high, you need to ask yourself what it would cost for you to perform these functions yourself, how much of your time and attention would be required if you didn’t outsource them, and whether it would even be possible for you to manage them on your own.

You should also be aware that with the growth of small-press publishing, the most established full-service distributors have become highly selective. Where they might once have been willing to work with one- or two-book self-publishers, most are now seeking publishers that will be around for a while and with which they can grow.

If your company is relatively new and has only a few titles, you will have to work hard to sell a full-service distributor on carrying your line. Your most important selling points are the quality of your books and their sales potential. Beyond that, a distributor will be interested in seeing a solid business plan and solid marketing plans for titles. In other words, before most full-service distributors will commit to working with a new publisher, they want to know they are dealing with a professional operation run by someone who understands the challenges of marketing to the trade.

If you are considering working with a full-service distributor, ask the following questions before you structure the relationship:

Is this a good fit?

Will this distributor be successful at selling my books to the chains and independent bookstores? Does the distributor have good relationships with the buyers that are central to my sales strategy? Do my books fit in with the other lines the distributor carries?

What is the distributor’s financial situation? Is it in danger of going under? Over the years, a number of distributors have declared bankruptcy, causing significant losses for their publisher clients and sometimes even pulling clients down with them. Due diligence in this area is critical.

Does the distributor pay on time? While this relates to the questions above, late payments may not always be an indicator of imminent bankruptcy. Instead, they may reflect delayed payments by the distributor’s major accounts. In any event, though, you have to examine your ability to absorb delays.

Where will I be in the pecking order? Would you rather be the smallest client of a more prestigious distributor, or a large client for a small distributor?

What is the distributor’s record for communicating with its clients? Will you be interacting with a specific person with whom you have a comfortable working relationship? Depending on your point of view, it may be either scary or exhilarating to learn that when you contract with a distributor, you are committing to the business equivalent of a marital relationship. Chemistry counts.

Will the distributor strengthen my marketing efforts? Does the distributor offer marketing feedback? Does it offer co-op funds for trade marketing programs and advertising? Most small publishers will benefit from as much marketing feedback as they can get. A distributor that is sensitive to your publishing goals and at the same time can speak for the marketplace performs a valuable service.

What will the services cost? Neither the most nor least important item on this list, the cost of trade distribution will nevertheless be one of your larger expenses as a publisher. When figuring the cost, be sure to add any extra fees a distributor charges for processing returns, catalog placement, trade show display, and so forth.

The most critical and debated distribution function is usually sales representation. All publishers want their books to be enthusiastically recommended by salespeople and appropriately advanced to the bookstores, and all small publishers worry that their books will be the last out of the bag. These are legitimate fears. If your distributor carries titles from 150 publishers and is represented by a commissioned rep who carries 20 small to midsize publishers in addition to the distributor’s line, your books can, indeed, find themselves at the bottom of a very tall pile.

On the other hand, some of the changes in the marketplace noted above may be mitigating this problem. Superstores with just-in-time inventory will, perhaps, order at least a few of the books at the bottom of the distributor’s list, while online retailers will list your book right alongside titles from the major publishers.

Even more important, however, will be your track record. As you develop an ongoing relationship with a distributor, your line becomes more important to the people there. They will convey that message to their reps, who will respond by pushing your books up on their list.

Here is a list of seven established full-service distributors. To locate others–smaller, newer, or more specialized–consult Literary Market Place, attend BookExpo America (BEA), and/or inquire among fellow publishers. And before you sign with any distributor, talk to as many publishers as possible about their experiences with the company.

Consortium Book Sales and Distribution, 1045 Westgate Dr., Ste. 90, St. Paul, MN 55114; 612/221-9035

Independent Publishers Group, 814 N. Franklin St., Chicago, IL 60610; 312/337-0747

Midpoint Trade Books, Inc., 27 W. 20th St., Ste. 1102, New York, NY 10011; 212/727-0190

National Book Network, Inc., 4720 University Way, Lanham, MD 20706; 301/459-3366

Partners Publishers Group, 2325 Jarco Dr., Holt, MI 48842; 800/336-3137

Publishers Group West, 1700 Fourth St., Berkeley, CA 94710; 510/528-1444

SCB Distributors, 15608 South New Century Dr., Gardena, CA 90248; 310/532-9400

Other Publishers as Distributors

A fair number of midsize and large publishers offer distribution services to smaller presses. In practice, what they provide is essentially the same as what full-service distributors provide, but you need to ask a few questions in addition to those you’d ask a full-service distributor.

In general, I recommend that small publishers look at distribution through another publisher when their titles in some way complement the larger publisher’s line. Allworth Press, for instance (the publisher of my Complete Guide to Book Marketing), has a number of titles for people in creative professions and has chosen to distribute through Watson-Guptill because, among other factors, Watson-Guptill has a recognized strength in the arts. Similarly, the travel publisher Globe Pequot distributes books for several other travel publishers.

One set of questions to keep in mind when considering distribution through a larger publisher is the publisher’s level of commitment. You want to know how important the distribution side of their business is to them. Over the years, some of the largest publishers have identified distribution as a profit center and pursued the business vigorously only to back off later.

Also find out whether you have one or more titles that will compete directly with titles from your distributing publisher. This can be a source of problems.

Distributing with Commissioned Reps

Publishers with enough volume to command the attention of buyers, especially chain buyers, often sell to bookstores through commissioned reps. Some find it worthwhile to maintain their own back-office facilities and staff to handle order taking, invoicing, warehousing, fulfillment, and collections, while others outsource various aspects of these functions. A list of commissioned sales reps appears on the Web site of the National Association of Independent Publishers Representatives (www.naipr.org). BEA offers a great opportunity to meet and talk to reps from all over the country.

Some publishers pursue a variant of this setup by having a national accounts manager on staff who sells the chains while hiring commissioned sales reps to sell the independents. Others use both sales staff and commissioned reps, and a few rely on telemarketing to stores in areas where the number of independent bookstores has dwindled.

In all these arrangements, publishers take on both the control and responsibility for getting a whole range of jobs done well. From the marketing and sales points of view, the most important questions to ask are the ones about representation and payment. No longer shielded by a distributor, a smaller publisher must wait in line to get paid and takes the hit directly if an account goes out of business. On the other hand, having removed a layer of intermediaries, you may find it easier to get your message through to bookstores and to develop closer relationships with key accounts.

This article is adapted from The Complete Guide to Book Marketing by David Cole, available for $19.95 plus $5 shipping and handling (NY state residents must add sales tax). Order toll-free from 800/491-2808; by mail from Allworth Press, 10 E. 23rd St., New York, NY 10010; or via www.allworth.com.

David Cole provides business plans and brokerage services through his consulting firm, Gemini Marketing & Communications (www.geminicole.com), and is principal of Bay Tree Publishing (www.baytreepublish.com). He can be reached by phone at 510/525-6902 or by e-mail at dcole@geminicole.com.

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